26 August 2021
IMF FUNDS MUST BE DISBURSED TRANSPARENTLY AND FOR THE BENEFIT OF THE PEOPLE
In August 2021, the IMF implemented a general allocation of Special Drawing Rights (SDRs) equivalent to about US$650 billion. (SDR 456 billion). Zimbabwe has been allocated an equivalent of US$961m. Zimbabwe is automatically entitled to SDRs by virtue of it being a member country of the IMF. Contrary to the assertion made by Minister Mthuli Ncube, this is not a “vote of confidence” in the economy but a standard allocation that is made to all IMF members regardless of how their economies are faring.
This is not the first time that Zimbabwe has received SDRs. After the global financial crisis of 2008, the IMF released SDRs to help member states.
Under the MDC Ministry of Finance, Hon. Tendai Biti, the government of the day used the SDR’s responsibly to strengthen the country’s reserves and pay back its loans to IMF. Of the US$400m received by Zimbabwe in 2009, US$140m was used to settle IMF arrears.
By showing the world that Zimbabwe was prudent and keen on solving its external debt problem, we built goodwill with bilateral and multilateral lenders. This was a precursor to the LIMA debt management plan of 2016.
Zimbabwe’s debt problem is a time bomb that affects not only the current generation but future generations as well. The best we can do for the future of our country is ensure the next generation inherits a prosperous nation and not one laden with onerous high interest debt.
In light of this, the SDRs received by Zimbabwe should in the IMF’s own words, help “ the economic conjuncture and the stage of the COVID-19 pandemic, the adequacy of reserves, the availability of fiscal and monetary policy space, domestic and external debt sustainability and financial stability, financing constraints, and other country-specific factors.”
The IMF went further to note the risk of misusing SDR’s in countries with “unsustainable debt or weak governance.” The current levels of corruption in the country and our unsustainable debt is precisely what the IMF is warning against. The risk of mis-use is very high.
At the same time the precarious macro-economic environment which requires attention could be delayed. Zanu PF, given a bit of fiscal space, heading towards an election is likely to use the money for electioneering if not held to account.
The past is replete with examples of how the regime misuses funds to fund election campaigns. There is no reason to believe this time it will be any different.
As a government in waiting, our priority is to be vigilant and call for transparency and stronger scrutiny of how the SDR’s will be disbursed. They must be used for the benefit of the people and not be looted by political elites. Safety nets must be availed to the poor.
We call for the Auditor-General’s office to be further capacitated to audit, monitor and report timeously to the people of Zimbabwe on how these funds are being disbursed.
We further urge journalists and citizens to be alert and expose corruption wherever it manifests and to demand accountability.
By holding government to account, we will ensure the SDR’s reach the intended vulnerable members of our society and be used in the fight against Covid-19.